Realist, not conformist analysis of the latest financial, business and political news

India’s Airline, Airports, Business Is Booming – Why Not, The Place Is Getting Rich

The Indian airline business is booming and airports are opening up across the country, mushrooming even. And why not? After all, it’s a big country, serious distances, lots of people and most of all the place is getting rich. Sure, average GDP per capita is still pretty meagre, but that rather masks how the middle classes in the cities are doing very well indeed thank you very much while those farmers out in the villages aren’t quite so much. And it’s those middle classes in the cities which are taking the flights.

So far all so obvious. But there’s another reason too. India’s allowing simple private sector competition at the same time. That’s why there are those regular offers of the Rs 1,000 (call it $10 among friends) tickets.

So this isn’t all that much of a surprise:

Kishangarh is one of 34 airports opened in the past 18 months in India, whose aviation sector has exploded in the wake of massive economic growth.

Yes, that’s going to be part of it, that simple boom in economic growth. More people can afford to travel, more people are travelling. But there is more to it than just that:

The demand for airports is driven, in part, by new affluence in second- and third-tier cities such as Kishangarh.

Indeed so. But, again, it’s not just that. India has long had a large and well connected railway network. Sadly though this has been run by the State these past 70 years of independence. Which means that it’s hardly been modernised, it’s always been far too cheap – and thus too crowded – and simply isn’t up to serving this desire for better travel.

Finally, there’s that little matter of distance. The usual rule of thumb is that train beats plane up to perhaps 200 miles. Maybe 300, 350, if we’re talking about high speed express trains and journey termini right in the middle of big cities. For longer distances the plane wins on that time basis. London to Paris? Why not the train? London to Madrid? Hmm, well, maybe, possibly the train, if you’re able to meet all of the connections just spot on. London to Rome? Nope, it’ll be the plane then. India’s large enough in and of itself that all of those journey lengths are within the country. We’d expect them to be using planes for many of these journeys.

Sure, the Indian aviation market is booming, flights, airlines and airports all. Once we figure in that economic growth, the historical background of the railways and the size of the place, why wouldn’t they be?

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